3 On Your Side: Mobile Payment App Warning

PHILADELPHIA (CBS) — Mobile payment apps allow you to pay for coffee, food and even other merchandise with the wave of your phone at the register. But is using them safe? 3 On Your Side Consumer Reporter Jim Donovan has learned that the feds are about to take a closer look at this high tech way to pay.

Accountant Tom Osler barely has time to eat lunch during tax season. To save time checking out, he pays his tab in seconds with this mobile payment app. He says, “Just wave the bar code device and the transaction happens instantly.” There’s no signing a credit card charge slip, no getting asked for identification, and while that’s quick and convenient, it has some experts worried. Security Expert Hemanshu Nigam says, “None of that is required so that’s a huge security risk.”

The Federal Trade Commission wants to weigh the pro’s and con’s of mobile app technology to consumers — including what happens if someone swipes your phone. Patricia Poss of the FTC says, “How does the retailer know that is in fact the right consumer who has that phone?”

Some apps allow you to set a password to unlock your account. Experts say that’s a good idea — and you’re better off linking a mobile payment app to a credit card rather than a debit card, because it’s easier to dispute purchases. Because as Nigam says, “When that bank account debit is done, it’s an immediate removal of money from your bank it’s gone.”

Security experts also say if you have a mobile payment app installed on your phone and the phone gets stolen be sure to alert your credit card company, bank or phone company as soon as possible. This will help you to avoid being billed for transactions that you didn’t make.